Tihama Power Generation Company has approached banks for debt to finance the extension of three captive power generation plants for Saudi Aramco.
The independent power projects (IPPs) will add an additional 500MW capacity across the three existing plants. There will be a significant steam component, which will be used for Saudi Aramco’s gas processing activities. The electricity produced will largely be used for residential and other buildings.
Tihama Power Generation Company, a joint venture of the UK’s International Power and the local Saudi Oger, built four captive power plants for the oil major at Ras Tanura, Juaymah, Shedgum and Uthmaniyah. Together, the projects produce 1,076MW.
The independent power projects (IPPs) will add an additional 500MW capacity across the three existing plants
The expansion projects will be financed as one package. Tihama Power has opened the deal up to all international banks, but expects to secure a significant proportion of the debt from the lenders on the original power projects. The proposal is to be fully-funded when submitted in October.
Saudi Aramco is also set to invite bids to build a further three IPPs in the fourth quarter of 2011. Again, power from the projects will be used by Saudi Aramco. The UK’s HSBC is financial adviser on both the new power projects and power plant extensions.
The move towards a reliance on captive power as opposed to grid-connected power was prompted by concerns within Saudi Aramco about the capacity of the kingdom’s electricity generation agency, Saudi Electricity Company’s (SEC), to provide the required level of power supply.